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Posted by Steve on January 7, 2007, 11:30 pm
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I just received my last paycheck of 2006 in 2007. My
company has reset all of my totals and started taking out my
401K contributions again (already at maximum contribution
for 2006). I thought that taxes were paid on wages earned
in a year not paid in a year. Is this the correct way to
report my income?
thanks
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Bob Sandler on January 8, 2007, 10:17 pm
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> I just received my last paycheck of 2006 in 2007. My
> company has reset all of my totals and started taking out my
> 401K contributions again (already at maximum contribution
> for 2006). I thought that taxes were paid on wages earned
> in a year not paid in a year. Is this the correct way to
> report my income?
It's not your last paycheck of 2006, it's your first
paycheck of 2007. Your employer is doing it correctly.
Taxes, withholding, and 401(k) contributions are based on
when the income is paid to you, not when you earn it. That's
how it will be reported on your W-2, and that's how you
report it on your tax return.
Bob Sandler
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Phil Marti on January 8, 2007, 10:17 pm
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> I just received my last paycheck of 2006 in 2007. My
> company has reset all of my totals and started taking out my
> 401K contributions again (already at maximum contribution
> for 2006). I thought that taxes were paid on wages earned
> in a year not paid in a year. Is this the correct way to
> report my income?
They're right, you're wrong. Date paid is what matters.
--
Phil Marti
Clarksburg, MD
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Bill Brown on January 8, 2007, 10:17 pm
Please log in for more thread options Steve wrote:
> I just received my last paycheck of 2006 in 2007. My
> company has reset all of my totals and started taking out my
> 401K contributions again (already at maximum contribution
> for 2006). I thought that taxes were paid on wages earned
> in a year not paid in a year. Is this the correct way to
> report my income?
Yes, this is the correct way to report your income. Most
individuals are cash basis taxpayers; cash basis taxpayers
report income when received, NOT when earned.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
|
Posted by Herb Smith on January 8, 2007, 10:17 pm
Please log in for more thread options Steve wrote:
> I just received my last paycheck of 2006 in 2007. My
> company has reset all of my totals and started taking out my
> 401K contributions again (already at maximum contribution
> for 2006). I thought that taxes were paid on wages earned
> in a year not paid in a year. Is this the correct way to
> report my income?
Most individual taxpayers are on a "cash basis" accounting.
The check you received in 2007 (even if for the last part of
2006) is 2007 income. Your company is doing this correctly.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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